Nonprofits Increase Direct Sales

The nonprofit sector raised a total of $91.5 billion through direct and interactive sales last year, concluded a study done by economic consulting company the WEFA Group, Burlington, MA, for the Direct Marketing Association. According to the DMA, that number represents 7 percent of the total U.S. direct/interactive sales.

The total was broken down into three categories: donations-$72 billion; mail order sales-$15.7 billion; and store traffic-$3.57 billion. Scott Hazelton, senior project consultant at the WEFA Group, said the increase in donations represented an 8.8 percent increase from 1997 when the total was $66.6 billion.

"I would attribute the increase in donations to the nonprofit community finally catching up on the curve in the direct marketing field," he said. "It has taken them a while to catch up on the technology aspect of things as well and they are now really starting to realize the importance of direct mail and personalized marketing."

Other findings in the study show that membership organizations raised the highest amount of revenue with direct/interactive donations and sales totaling $46 billion, while Social Services generated the second highest amount with $24 billion. Membership organizations also ranked eighth in the top 25 industries of direct/interactive sales volume from all markets conducting consumer- and business-to-business marketing. Miscellaneous retail, business services and real estate ranked as the top three.

With regards to compound annual growth rate revenue Social Services was first in the nonprofit sector with a rate of 10.5 percent, 1.8 percent more than the average of the 51 other industries using direct/interactive marketing. WEFA also found the nonprofit segment spending the most on advertising to be the field of education, with $3.2 billion.

According to the report, the area where nonprofit organizations showed the most leadership was growth rates of direct/interactive expenditures. Social Services ranked second amongst the 51 other industries and leads the nonprofit sector with a growth rate of 11.22 percent, nearly twice the national average. Museums and galleries ranked fourth out of the 51 other industries with a growth rate of 10.66 percent, while membership organizations and education both showed rates of 9.17 percent and 7.16 percent, both above the national average.

The report also showed that there are 1.9 million direct/interactive jobs in the nonprofit sector, with that number expected to grow to 2.4 million by 2003.

WEFA performs studies for the DMA every year focusing on different markets. The study contained samples from nonprofit groups that were both members and non-members of the DMA. Currently the DMA has 160 member nonprofit organizations.